Developing Value Based Customer Relationships

What is the basis of your business with customers? In our very volatile and ever-changing business climate, it is critical that we understand why customers do business with us. Only if we know why customers are choosing to do business with us can we plan for the future and perpetuate our success.

When I ask employees and salespeople why their customers do business with them I hear generalities, such as great service, we are better, no real competition, or our innovations. These generalities indicate a lack of clear understanding of the fundamentals of business and, more importantly, indicate a tremendous potential danger to future success. We must understand the basis of the customer's decision if we are to influence it.

Upon examination, many companies base their business on obtaining "transactions" with customers. These transactions may be based on product, price, availability, and even dependability of conducting the transaction, but they are still transactions.

With some companies, the decision is based on more than a transaction. At the other end of the spectrum or continuum, the basis for doing business with some companies is the customer relationship. This relationship is based on the customer's dependence on not just being provided transactions, but the real assistance, support, or value the company provides. It goes far beyond products, price, and availability. It is a relationship based on the business's ability to contribute to the customer's business and organizational issues. Developing a relationship requires the salesperson and executives of the company to understand the customer's business and their specific situations, problems, and needs. It goes beyond a superficial level to a deeper relationship of mutual trust and delivery of value.

When a company develops a relationship with a customer based on mutual satisfaction of needs and objectives both have to understand each other. This relationship of trust and dependence is built on providing answers and solutions to problems that contribute to business issues, such as better flow of information, improving operations, and improving profits. By contributing to these business issues a company can contribute to the client organization's real issues such as improved employee productivity, increased customer responsiveness, an improved competitive advantage, and assisting in reaching its objectives and profit. This relationship transcends product, price, or availability and puts both companies on a level footing in a sense creating a company-client partnership.

In this type of relationship, if the business' needs change, the relationship evolves and changes to match the client's needs. By placing the focus on a relationship you can stay focused on the customer and continue to adapt to the changing environment, as the customer's needs change. It keeps your company and its products from becoming outdated or obsolete.

Many situations fall in between the pure transaction and total relationship level. Let's examine some typical situations and see where they fall on this continuum of transaction to relationship.

Bid
If a company has fought and won a bid, they understand this is a transaction-based sale and that as long as they reliably provide the transactions, they will continue to get the business for the fixed period of the bid. In this situation there is a built-in deadline or end that is factored into their plans. In short, everyone knows this has to be re-sold at the next bid period. In some instances a quote for products or services can take on the same characteristics, but may not be as finite.

Projects
Large projects are usually sold one at a time and may involve many transactions; however, they are still transaction-based. Even a multi-million dollar project over multiple locations may be a single transaction in which product, price, and availability have played a large part. The customer may have considered the capability of the organization as a qualifier to be in the running for the project but, like the bid, it has a finite end and future projects must be uncovered and sold. The customer is firmly in control of this project process, just as in